Burberry Ltd. in 2014

Burberry Ltd. in 2014

2016 | By Ashley Meigs, Lawrence J. Ring, and Ronald L. Hess

Estimated reading time: 33 minutes

Key Takeaways

 
  1. This case study describes the rejuvenation/reinvention of the Burberry brand into one the leading luxury goods companies in the world.
  2. Following decades of diversification into a wide range of luxury products created by globally distributed design teams, in the mid-2000s Burberry retrenched: centralizing design and making its iconic trench coat the centerpiece of its brand.
  3. By maintaining its heritage but moving to an omnichannel strategy designed to create an engaging experience through emotive brand content, Burberry retained its core customers but also captured the new millennial luxury consumer.

Christopher Bailey stood inside the Burberry Flagship store in London, the last one to leave after the hustle and bustle of a city day. In 2012, he had introduced this store as a culmination of the revolutionary new direction the clothing company had taken, seamlessly merging the digital and tangible into a brand known equally for its cutting-edge technology and for its high fashion. He had been serving as chief creative officer for Burberry then, working under then-CEO Angela Ahrendts to transform the company. With Ahrendts at the helm, Burberry had been transformed. Since 2006, the company had more than doubled its revenue—and quadrupled its operating profit. Omnichannel marketing—a new approach streamlining and synchronizing everything the company did online, offline, and around the world—brought the brand into the 21st century. Awards recognizing the company for their innovation and foresight poured in. But the last six months of 2014 had seen a massive change in the structure of Burberry’s leadership. Ahrendts had departed the company to work as senior vice president of retail and online stores for Apple, and Bailey had been named as the new leader of the company in a title created just for him: Creative Chief Executive Officer. It was a first in the industry: the designer, the “creative,” got the keys to the kingdom.

The future of Burberry—all aspects of it—was placed squarely on Bailey’s shoulders. The digital age was definitely upon them, and companies had to be agile to stay competitive—especially one that had established itself as a leader in this new space. A company that above all respected its heritage, the culture of Burberry centered on brand integrity, disciplined execution, constant evolution and balance across channels in its business strategy. Its culture was one of creative thinking, cross functional collaboration, intuition, and open communication. The core values of the company—protect, explore, and inspire—were the foundation of where the company came from, and where it was going.

As Bailey looked out over the floor, watching the perfectly timed videos and interactive displays blend seamlessly with the static fabrics and product presentation, he wondered: what was it going to take to keep Burberry soaring the way that it had the last decade? And, perhaps more importantly, was he going to be able to maintain the creative inertia that had brought the company to its coveted position today, while also running the $2.33 billion brand?

Exhibit 1

A World of Indulgence

Source: The Economist

The Luxury Market

In December 2014, the luxury goods market had exploded. Couture clients were no longer the name of the game, as the number of luxury goods consumers worldwide exploded to 330 million. Spending on luxury products (jewelry, watches, clothing, handbags, etc.) had risen at double the rate of global GDP (Exhibit 1). Following the global economic downturn in 2008, the luxury market saw growth accordingly, and largely in Asia. A variety of global trends affected the luxury industry. Once, product design, sourcing of raw materials, distribution, and marketing were all controlled by the luxury brands. Following the emergence and dominance of the Internet, however, luxury brands had to readjust their strategy. The Internet placed power in the hands of the consumer, allowing them to compare pricing, shop on their terms, adjust expectations with regard to price, value, and brand. Other key influencers in the luxury market were ubiquity versus exclusivity (many luxury brands were slow to adopt an online sales platform), the role of social media (giving a strong voice to the consumer), omnichannel, globalization, tourism, custom, and communication. For a more detailed analysis of the macro environment of the luxury market, please refer to the Digital Exhibit, which links to a comprehensive Deloitte report.

Exhibit 2

Biggest and Best

Source: The Economist

The def­ini­tion of “lux­ury” too had changed: once synon­ymous with over­indul­gence, brand­ing and a wide var­iety of uses and com­panies mean that a lux­ury prod­uct could be “au­then­tic,” “aspi­rational,” “absolute,” or “affordable.” The generally enormously high price point associated with luxury goods came from a variety of different reasonings on the consumer side: status, brand value, quality, and level of income. Luxury goods companies relied on telling this story effectively—why is their product worth it? What is the X factor? It almost always included craftsmanship and a sense of place. For some luxury brands, the designation is not just represented by a higher level of quality, but rarity (Pagani, an Italian car manufacturer, makes just 38 cars a year). Other companies held that even though they might be mass-market or manufactured in China, the “soul” of the company comes from the creative and legacy of a brand. The question almost every luxury product manufacturer (Exhibit 2 for a list of the “biggest and best”) had to ask themselves was, is luxury in the eye of the beholder? And, if so, who’s eye were they trying to catch? It was an entirely new market from the one Burberry first entered into, and was symbolic of the many changes both the fashion industry and brands had been through during the last 100 years.

Exhibit 3

Captain Scott’s Tent

Source: Burberry Website

Background of Burberry

Thomas Burberry, the former dressmaker’s apprentice who founded the company in 1856 when he was 21, set out with one, clear goal: produce innovative, functional outerwear. Burberry developed a breathable, waterproof fabric, gabardine,2 which was instantly successful and allowed him to open his first store in 1891. Burberry—or Burberry’s as it was known for most of the company’s history—quickly became known for its high quality outwear. In 1901, the now-famous Burberry Equestrian Knight Logo was developed and registered as a trademark, and Burberry was selected as the official outfitters for Ronald Amundsen who went on to become the first man to reach the South Pole, as well as Ernest Shackleton (Exhibit 3) the leader of the famous expedition across Antarctica.

During the Boer War in South Africa at the turn of the century, British officers began wearing Burberry “weatherproofs,” preferring the lightweight material to the heavy, rubberized Macintosh.

In 1912, Burberry patented the garment that would become synonymous with the brand: the Tielocken, the early predecessor of the trench coat. Seeing the popularity of the garment among high-ranking officials, the British War Office gave its official approval to the Burberry innovation, and the coat was used throughout WWI and the time after. Part of the appeal of the trench coat—given the name during World War I—was its sleek, lightweight design that closed with a single strap and a buckle fastening, and featured only a button at the collar. The success of the military Burberry was cemented when Lord Kitchener, the commander in Chief of the British Army, began wearing it himself.

The popularity of the Burberry name was sealed, and Thomas Burberry’s dream realized. The brand was known throughout England as high-quality outerwear. In the mid-1920s, the now-iconic Burberry check pattern was created, and used as a liner in trench coats. Specially designed aviation garments were developed by the brand, outfitting completely A.E. Clouston and Betty Kirby-Green when they made history achieving the fastest flying time to South Africa in 1937, piloting the aptly named “Burberry.” The Burberry trench coat became an iconic, inherently British item, establishing itself in the hearts and minds of customers around the world, and was seen in films such as Breakfast at Tiffany’s and Casablanca.

In 1955, the company was purchased by Great Universal Stores, marking the first change in the direction of the Burberry brand. In the late 1960s/mid-1970s, Burberry began making its transition to everyday outerwear. The iconic check pattern was used not just as a liner, but for umbrellas, scarves, luggage, and other accessories.

The brand became popular with the British casual clique, and took off in Asian and U.S. markets, where consumers clamored for the company’s “very British,” heritage look. By the mid-1980s, exports made up more than 60 percent of company sales.

In the early 1990s, believing that the company could not ride exclusively on the laurels of its heritage—the company was concerned that “a fine tradition is not, in itself, sufficient today”—Burberry began moving away from the style that had been their trademark for the last century. It sought to develop items for younger, more fashion-aware clients, and licensed their name, iconic check pattern, and knight logo. While this strategy led to significant increases in sales, thousands of goods bearing the Burberry name entered the market—without the control or approval of the design team. The lack of direct oversight in products meant that just about anything—ranging widely in quality and make—could be sold under the Burberry brand, with the protection and reputation for excellence the company had spent so many years developing. The brand was no longer in their control.

Exhibit 4

Trenchcoat

Source: Burberry Website

The cost was a severe blow to the Burberry name. Its place as a prestigious luxury brand was in serious jeopardy. Facing cultural backlash from its target segment and the risk of losing the equity of its brand, Burberry hired Rose Bravo in 1997 to rejuvenate what had become a stagnant clothing line. Bravo immediately began breathing life back into the company, hiring Italian-American designer Roberto Menichetti to “retool” the brand’s image. The result was a stunning new ready-to-wear women’s line, and the now-iconic Kate Moss as the face of the brand, whose own reputation as an ultra-hip, “cool Britannia” played perfectly into Bravo’s vision for the company (Exhibit 4). Bravo split Burberry into three distinct lines: high fashion Prorsum, a core collection under the Burberry London label, and a younger line called “Thomas Burberry.”

The reinvention of Burberry was underway, but far from complete. The brand, while back in the minds of the consumer as a luxury good, still struggled with its identity. Was it a heritage brand, or cutting edge fashion, or both? And while its initial effort to re-establish itself as a brand worth having had succeeded greatly, Burberry still faced the challenges inherent in the new millennium: how does a fashion company stay relevant in an age of technology? How do those two worlds—the old world of its inception and the new world of endless change and innovation—merge successfully?

Ahrendts and Bailey: Revolution of the Brand

When Angela Ahrendts assumed the role of CEO in 2006, there were a lot of questions surrounding the new leader of the company. In what kind of direction would she take the company? Was she going to be as good as Bravo? Was she going to be better? What if she was worse?

When Ahrendts arrived in London, she looked around, examined the company, and had one very simple question: Where were all the trench coats?

Arendt recounts:

With its rich history, centered on trench coats that were recognized around the world, the Burberry brand should have had many advantages. But as I watched my top managers arrive for our first strategic planning meeting, something struck me right away. They had flown in from around the world to classic British weather, gray and damp, but not one of these more than 60 people was wearing a Burberry trench coat. I doubt that many of them even owned one. If our top people weren’t buying our products, despite the great discount they could get, how could we expect customers to pay full price for them?3

Ahrendts believed that the brand had gotten off track once again. While Burberry was respected and acknowledged as a luxury product, it was focusing on the wrong kinds of products. A shift had been made from the outerwear that was the heartbeat of the company to a wide collection of products without focus.

“We had 23 licensees around the world, each doing something different,” she recalled. “There’s nothing wrong with any of those products individually, but together they added up to just a lot of stuff—something for everybody, but not much of it exclusive or compelling.”4

Ahrendts had her work cut out for her. She needed to narrow the focus of the brand, but with annual revenue growth of only 2%—an abysmal statistic in a rapidly growing industry—she would need to reinvent Burberry’s position in the luxury brand category as well.

“In luxury, ubiquity will kill you—it means you’re not really luxury anymore,” she said. “And, we were becoming ubiquitous. Burberry needed to be more than a beloved old British company. It had to develop into a great global luxury brand while competing against much larger rivals.”5

One of the biggest issues that Ahrendts noticed was a lack of consistency—in experience, in products, in service—across Burberry stores. A hallmark of a successful brand—bringing to mind brand giants of the early 2000s such as Starbucks or Apple—she knew that this was a central issue to the brand’s reinvention.

At Burberry, inconsistencies in product development ranged dramatically from country to country. During her first six months on the job, Ahrendts found that almost every region she visited had a different plan.

“In Hong Kong, I was introduced to a design director and her team, who proudly showed me the line they were creating for that market: polo shirts and woven shirts and everything with the famous Burberry check, but not a single coat,” Ahrendts recalled. “Then we went to America, where I was introduced to another design director and design team. This team was creating outerwear, but at half the price point of that in the UK. Furthermore, the coats were being manufactured in New Jersey. So we were making classic Burberry raincoats that said ‘Made in the U.S.A.’”6

“Great global brands don’t have people all over the world designing and producing all kinds of stuff,” Ahrendts said. “It became quite clear that if Burberry was going to be a great, pure, global luxury brand, we had to have one global design director.” (Exhibit 5 shows Burberry’s revenue by destination).

Exhibit 5

Retail/wholesale revenue by destination

Source: Burberry 2013 Annual Report

Enter Christopher Bailey, a mild-mannered designer with a keen eye who had been with the brand since 2001, first as a design director, then as creative director in 2004. Bailey, who knew Ahrendts from working at Donna Karan previously, was tasked with, essentially, purifying the brand. That meant a return to its roots, and a rejuvenation of Burberry’s core products.

“It’s not unusual for a luxury company to be born from a single product and then diversify,” Ahrendts said. “Louis Vuitton began with luggage and Gucci with leather goods. But, even as they diversified, each continued to earn the majority of its revenue from its original core products. Surveying the industry, we realized that Burberry was the only iconic luxury company that wasn’t capitalizing on its historical core. We weren’t proud of it. We weren’t innovating around it.”7

Bailey, who already had carved out a name for himself as a leader in both design and innovation, became the “czar” of design: everything that a consumer could see, smell, touch had to be signed off by him, creating a uniformity and quality that the brand had lost.

But, Bailey’s role was far more than just a rubber stamp of approval. His task was not just to put Burberry back in the game, but shoot it directly to the top.

For Bailey, Burberry was more than just a brand, a label that was sewn on the lining of expensive garments. It was an experience, something that captured the magic of its legacy and past, and, of course, its inherently British DNA.

The challenge: return to the company’s core products—specifically, the trench coat—but bring it into the 21st century.

The How of It

Changing the Burberry brand image could be boiled down to two key segments: the product being offered, and the way it was being offered. As part of the return to Burberry’s core, Bailey began taking the traditional trench coat and breathing new life into the garment. Calling it the “ethos of the trench,” Bailey and his design team took to basing everything they did on the Burberry backbone. Literally everything—from store design to ad campaigns to new collections—was based on the timelessness of the trench coat and Burberry’s legacy.

Organizationally, the company structure also needed work. As shown by the disconnect between the stores, Burberry needed to tighten up on not just its image, but the mechanics behind it. Primarily, that meant shifting the company’s structure from one that was historically corporate—someone over every category of product, for both men and women—to a focus on the brand as a whole.

Ahrendts recalls: “In addition to putting Christopher (Bailey) in charge of all design, we had to hire functional expertise—a head of corporate resources, a head of planning, and a chief supply chain officer.”8

It also meant, she said, a retargeting of where and how to sell. As part of entering the big race with luxury brands, Burberry moved their retail focus to markets where competitors had a presence, opening 132 stores from 2007 to 2013.

It also refocused its sales force.

“Trench coats are among the most expensive items we sell (many of them are priced over $1,000), but the staff was least equipped to sell them,” Ahrendts said. “Our salespeople had become accustomed to selling what was easy—relatively inexpensive items such as polo shirts. On commission, they’d be better off selling one trench coat than 10 polo shirts. They understood the math, but they needed tools to fully appreciate and communicate why the trench was the best investment for their customers. We established strong sales and service programs to put product education front and center.”9

The brand invention led to much more than just a refocusing for the company’s image: it also led to a dramatic increase in revenue, even compared to fellow luxury brands (Exhibits 6 through 8b). The company received much attention for this turnaround, winning a wide variety of awards—including Retailer of the Year in 2012 and a spot on Fast Company’s list of The World’s Most Innovative Companies—that recognized them not just for their brand reinvention, but the skill with which the company was managed while doing so.

Exhibit 6

Revenue and Operating Profit

Source: Burberry 2013 Annual Report

Exhibit 7

SPM for Luxury Companies: 2014

Source: Bloomberg, case author

Exhibit 8a

Exhibit 8a

Source: Bloomberg, case author

Exhibit 8b

Exhibit 8b

Source: Bloomberg, case author

Another important element of re-establishing Burberry’s brand image was a massive retooling of the marketing and advertising efforts. For Ahrendts and Bailey, that meant a new campaign targeted at a brand new segment: Millennials, the group of tech-savvy 20- to 30-somethings who had reached adulthood at the turn of the century.

“We also began to shift our marketing efforts from targeting everyone, everywhere, to focusing on the luxury customers of the future: Millennials,” Ahrendts said. “We believed that these customers were being ignored by our competitors. This was our white space.”10

It also happened to be a segment that had no knowledge of Burberry’s core product.

“The effort had to be led by design—we needed to create outerwear that was innovative, cool, and so inviting that people would become repeat customers,” Ahrendts recalled. “Burberry used to have just a few basic styles of trench coats: Almost all were beige with the signature check lining, and the differences between them were minor.”

All that needed to change.

“We had to infuse the new lines with our heritage,” Ahrendts said. “We also had to rethink our entire marketing approach for these customers—to make it digital.”

With Bailey at the helm, design took center stage. Marketing and advertising efforts became more than just selecting a target, it was about creating a complete experience to go along with the brand. The campaigns were a blend of the digital and the artistic, the modern and exciting with quality and legacy, the old and the new.

With this in mind, Bailey brought the new brand image to life, both online and in-store. A series of breathtaking photo shoots, centered on the trench coat, of course, helped to re-establish the Burberry brand. The company’s website went from disjointed to a seamless, glossy experience highlighting both collections and products with stunning visuals and music.

“It has become the hub of all our marketing and branding, and a trench coat is always one of the first things you see when you go online,” Ahrendts said. “The site is designed to speak to that millennial consumer through emotive brand content: music, movies, heritage, and storytelling. And, we understand how critical it is. More people visit our platform every week than walk into all our stores combined. And, the majority of our employees at corporate headquarters in London are under 30. They understand who we are trying to reach.”11

Of Bailey’s reinvention of Burberry’s digital space, Fast Company wrote:

Bailey has deployed a digital arsenal to transform the way the brand speaks to its customer. Under his direction, ‘fast fashion’ went from meaning cheap designer knockoffs to a ‘Tweetwalk’ in which Burberry’s newest collection was visible to anyone on the Web before its models hit the runway. Likewise, his efforts to democratize a haute house of style don’t come from deep discounts. Instead, he made some items, such as the trenches, available to purchase immediately after the show-effectively blasting through the barriers of fashion’s old guard and the arduous months-long wait for them to hit the stores.12

This “democratization” of the company was another way Bailey adjusted the brand image. Customer service became front and center for the brand, as well as making it an accessible and affordable one, by luxury standards at least.

“I think there’s an expectation that all fashion companies have to be cold and austere and arrogant,” Bailey said in an interview with The New Yorker. “I just think there are other ways of doing things.”13

Bailey also was able to merge old British charm with Milan-worthy design, hitting perfectly the type of clothing for which the market was clamoring.

From a New Yorker piece published in 2009, author Lauren Collins recounts an interview with the fashion-news director of Vogue, Sally Singer. Bailey, she said, has a soulful, reflective spirit.

“‘He brought that to a luxury brand at just the right moment, when glitz and bling were on the way out, and he managed to do it in a way that was just downbeat enough.’”14

Exhibit 9

Brand

Source: Burberry 2013 Annual Report

The article continued: “Bailey is interested in para­doxes—‘dish­eveled elegance,’ ‘real fashion things against things that have a sense of heritage.’ His designs range from muddy floral dresses and luxurious, metallic trenches to, this season, pieces of jewelry inspired by barbed wire.” Exhibit 9 discusses the corporate definition of the brand.

And those trench coats?

“We have more than 300 SKUs,” Ahrendts said. “From capes and cropped jackets to the classic Burberry trench in a range of vibrant colors and styles, with everything from mink collars and alligator epaulets to studded leather sleeves.”15

And, they aren’t going anywhere, either.

“Today, it’s taken for granted inside the company that the trench coat must remain our most exciting, most iconic product. It guides all our decisions,” she said. “Our sales associates understand it. This product is who we are.”

Omnichannel Marketing

In addition to maintaining the integrity and message of the brand, one of Burberry’s primary challenges was communicating and serving its consumers in a world that had been revolutionized by digital and technological innovations, creating a shopping space that did not exist for most of Burberry’s existence as a retailer.

Along with a strong and innovative presence in both the traditional and social media spaces, a massive piece of the 21st century Burberry’s strategy & marketing to end-customers (and department stores that carried their products) was the idea that Burberry was not just a product, or group of products, but rather an experience. This was done through a unifying of all aspects of the brand—physical stores, e-commerce, website experience, training of associates—to create a seamless and extremely positive experience for the customer, regardless of which channel they were in.

As Burberry stated boldly and in large font on its investor relations webpage, their strategy was to “enhance consumer resonance and operate more effectively through exacting use of brand assets and coordinated action across the global organization. One brand, one company.”

In more colloquial terms, Ahrendts referred to the company at large as “the million square foot store,” indicating that every interaction, no matter what channel customers choose, was as crucial as the next.

Most dramatically highlighted with their flagship stores and their website, both characterized by beautiful graphics, music and sleek presentation and display of key merchandise, omnichannel strategy was inherent in all facets of the brand, and was what the company credited with an increase of 17 percent in sales in August 2014.

On the purchasing side, this strategy also allowed shoppers to view inventory online in-store, offered in-store pickup and allowed customers to ship packages from both warehouses and individual stores. Training of sales associates allowed them to both communicate this to consumers as well as order it for them on the spot. This strategy also was implemented through consistency in brand image and experience, keeping its finger on the pulse of the latest social media trends (and developing its own), and constantly innovating to see around the corners of what customers wanted instead of playing catch up.

As a global brand, integrity and maintenance of quality was essential to Burberry’s success. Through implementing this omnichannel strategy, the company was able to move as one, coordinated organization, in terms of brand image anyway, instead of fragmented regional areas (as it was when Bailey first took over as creative director).

This was highlighted in 2014, when the company “transformed” its brand image in Japan. From the company website:

Burberry strengthened its presence in this important luxury market through the continued roll-out of the global collection and the Roppongi store opening. This is an important step in aligning the local brand perception with the global positioning and away from its premium status under the current licensees.

The commitment to brand integrity led to a wide variety of recognition globally. In 2014 alone, Burberry was listed in Interbrand’s “Top 100 Global Brands” for the fifth year in a row, was highlighted by Fast Company as the seventh most innovative company in retail, led media think tank’s L2’s Fashion Digital IQ index for the third consecutive year and was awarded “Best Brand” and Christopher Bailey named “Menswear Designer of the Year” at the British Fashion Awards.

Place

Burberry sold its products through both retail (including digital) and wholesale (Exhibit 10). Offline, the company directly operated 497 stores: 215 mainline stores (brick & mortar) and 227 concessions inside department stores. This included flagship stores in key markets—London, Shanghai, LA, Paris—that generally included cutting-edge technology and digital experiences along with an exhaustive collection of Burberry products, embodying the company’s digital/fashion blend and emphasizing the integration of its online and offline experiences.

Exhibit 10

Revenue Sources

Source: Burberry 2013 Annual Report

In-Store Experience

Often quite beautiful and featuring a variety of digital innovations, Burberry stores sought to give customers in-store the same kind of visual and personal experience they received online. Said Ahrendts of the London Flagship store, when it opened in 2012, “Burberry Regent Street brings our digital world to life in a physical space for the first time, where customers can experience every facet of the brand through immersive multimedia content exactly as they do online. Walking through the doors is just like walking into our website. It is Burberry World Live.”16

One of Burberry’s biggest focuses, therefore, was not bringing store experiences to the website, as other clothing companies were trying to do, but the inverse. In a 2012 interview, Bailey said that, essentially, the digital world came first. The store on Regent Street was designed as a physical manifestation of Burberry World Live.

Standing in line to make a purchase, for example, was a thing of the past.

“We designed it like that because when you are shopping at home online, you are on the sofa with your credit card,” Bailey said in an interview with The Guardian. “You don’t stand up and queue.”17

“I find it weird that anyone would find it weird [digital-first thinking],” he said.

Clothing in the store had chips that could be read by screens and mirrors using radio-frequency technology.

Stores also included a wide variety of multimedia—things like recorded and live performances and broadcasted fashion shows.

“When a customer walks into a changing room holding a jacket,” a feature piece on the store by The Guardian detailed, “one of the mirrors might respond by turning into a screen showing images of how it was worn on the catwalk, or how it was made.”18

The stores were also outfitted to give customers immediate answers about inventory availability.

“A network of small high-speed lifts concealed behind restored paneling has been added because the online shopper, accustomed to knowing in the space of a click whether an item is available in their size, will not put up with waiting the 10 minutes it could take a sales assistant to travel to and from the stockroom in a building which has 25 staircases and 1,500 sq m (16,000 sq ft) of backroom space,” the article continued.19

Music, a self-declared passion of Bailey, also played a large role. The London Flagship store had 420 speakers and a stage for live music. Bailey hand-selected many songs, and the musical section of the website, Burberry Acoustic, showcased bands that captured the essence of Burberry through music, clothing and videos. Bands were given front-row seats at Fashion Shows, and often used in ad campaigns.

“People arrive at Burberry.com through many entry points, because that’s how the Internet works. They might find us through music, for example,” Bailey stated.

The blend of technology, music, and aesthetics merged in stores to hopefully create what Bailey referred to as “moments” for the customer. At the end of a musical set, for example, “rain” might fall in the store, emphasizing both the mood and tone of the clothing, but also the inherently British weather matched with the iconic Burberry heritage of British outerwear.

Online Experience

The Burberry Website, AKA Burberry World Live, underwent a dramatic transformation and consolidation when Ahrendts took over as CEO. It showcased seamless transitions, a sleek interface and supplemental content, such as music and design ideas. Displayed prominently were both the products as well as high resolution photos featuring products and models. The website was active and available in 11 languages, and was a vehicle for showcasing new products, brand images and social media initiatives. While at its core it served as a way for customers to browse and purchase product, its design was structured to emphasize and re-emphasize Burberry’s brand identity through catalog and runway photos, featured ad campaigns and videos (often highlighting British celebs like Emma Watson and, most recently, Romeo Beckham), and musical collaborations. The website’s aesthetics and creative vision is mirrored by the in-store atmosphere, creating a seamless, “blurred line” for consumers shopping in either space to be immersed in the over-arching Burberry brand experience.

Product

Burberry sold a variety of products in apparel, accessories & beauty, broken down by gender. Considered “luxury” goods, items were generally made with high quality materials. Burberry’s signature product was its outerwear, specifically its trench coat, which came in a wide variety of colors and styles. As part of the multichannel strategy, the same products were available at every location. Exhibit 11 shows a revenue breakdown by type of product.

Exhibit 11

Retail/wholesale revenue by product division

Source: Burberry 2013 Annual Report

Broadly, Burberry offered three types of products (Exhibit 12):

Exhibit 12

Apparel Pyramid

Source: Burberry 2013 Annual Report

Apparel: Included a wide variety of clothing and outerwear, including bikinis, coats, hoodies, polo shirts, short-sleeved shirts, suits, trousers, shirts, and dresses.

Accessories: Included a wide variety of bags/purses (clutch bags, sling bags, crossbody bags, etc.), ties, scarves, shoes (rain boots, pumps, flats, etc.), belts, wallets, and hats.

Beauty: In 2014, the company launched a complete selection of beauty products in a range of colors for face, lips, eyes, and nails, to complement its existing line of fragrances. Specifically, the company had three brands (or lines): Burberry Prorsum, a style baseline for the company’s other brands; Burberry London, heritage outerwear that included business wear; and Burberry Brit, the more “every day,” entry-priced brand.

Value

Burberry was considered a “luxury brand,” defined by high levels of craftsmanship, brand value (as perceived by the consumer) and sold at a high price point. Most of Burberry’s items were priced between $250 to $2,000, with some items (trench coats) at the higher end. The value in the Burberry brand name was emphasized by the company’s omnichannel strategy, which incorporated ad campaigns, a seamless online and in-store shopping experience, and brand perception in the world at-large. For Burberry, the entire experience—from digital to in-store—sought to emphasize value through high quality products, beautiful and innovative atmosphere, high levels of customer service, and continued efforts to maintain the quality and luxury reputation that it had reestablished in the last decade. Broadly, the value of a luxury brand can be determined by price, quality, aesthetics, rarity, extraordinariness, and symbolism.

People

A big part of Burberry’s approach included high levels of customer service. Associates were also equipped with iPads that allowed them to provide customers additional detail (videos, statistics and information about Burberry products), order an out of stock item immediately, and use the Customer 1-2-1 platform. A permissions-based iPad application tool, 1-2-1 allowed associates to create and view customer profiles in one place, including visual wardrobe, global transaction history online and offline, and recorded product and fit preferences (Digital Exhibits).

Customer support was offered 24/7 by phone, email, live chat and a Twitter customer service account. Associates also spent maximum time on the selling floor, making them more available to customers.

As part of the omnichannel strategy, associate training was high priority and ensured optimal inventory availability and improved selling techniques. Burberry invested heavily in advanced training, physical and digital synchronization and improved merchandising disciplines, incorporating the same digital and technological prowess demonstrated in its customer-facing innovations to improve its salesforce.

Online, Burberry’s salesforce took the form of streamlined and easy-to-find products, supplemented by an active online support staff, apps and a variety of content aimed at making the browsing experience both digitally and in-store as enjoyable as possible.

Burberry also supported the continued training and advancement of their employees through programs such as the Retail Management Program, which prepared retail associates for a career in store management, and an extended and improved new associate on-boarding program, which improved training and culture/brand insights for employees in London, New York, and Hong Kong. Burberry also supported the development of 75 high potential associates toward becoming next-generational leaders, indicating a high level of training and support in efforts to recruit and maintain talent.

Communication

Media: Burberry’s entire marketing focus was driven by brand engagement based on an innovative use of digital and traditional media to connect audiences globally with the brand, with a strong emphasis on targeting specifically the Millennials (born between 1981 and 1996). This was accomplished through communicating the Burberry “story” through a variety of both traditional and digital campaigns, expanding on both its heritage and the innovation in both style and design that made it a leader in the luxury market, again emphasizing the omnichannel strategy.

The Burberry story, as outlined by Bailey in the 2013 Annual Report:

In Burberry we have something truly unique: a company whose story threads through British history and culture, from the wardrobes of the Royal Family, through the factories of Yorkshire and mills of Scotland, to some of the world’s great acts of exploration and many of the icons of our popular culture. Deeply rooted in expert craftsmanship and innovative design, and brought to life both physically and digitally, this story defines both who we are today and what we can become. In an increasingly competitive marketplace, and as luxury consumers globally place ever-greater emphasis on provenance, it gives Burberry that most precious of things: an authentic and clear identity.

Social Media: One of the first companies to both recognize and capitalize on the importance of social media, Burberry continued to use it as a key element of its marketing, folding it into the signature mix of digital innovation and aesthetics that has become its trademark. Recent social media endeavors include:

  • A “kisses” campaign partnership with Google, an Internet-based platform that enabled users to capture and send virtual kisses. Participants used a touch screen or desktop camera, used a Burberry Beauty lip color, and then sent the kiss via email.
  • Partnership with mobile messaging platform WeChat at the Burberry 2014 women’s fashion show. WeChat facilitated a personalized experience of the show, and generated the most social media buzz in brand history, measured across all social platforms.
  • In 2013, Burberry finished the year with 17 million Facebook followers, making it the most followed luxury brand on Facebook.
  • In 2011, Burberry’s marketing campaign for its Body fragrance sent 250,000 samples out to Facebook friends in return for customer details.

Burberry often used the work of key influencers, such as Emma Watson or musical acts, to help color in the brand image as well. A 2013 campaign to promote its eyewear, the Spark collection, featured music-based marketing campaigns by well-known British Bands. And, Watson, at the peak of her film popularity after the release of the final Harry Potter film, became one of the key faces of the brand. The most recent of these was Romeo Beckham, the son of soccer superstar David Beckham and Spice Girl’s diva-turned-fashionista Victoria Beckham (Digital Exhibits).

Comparison

While Burberry effectively entertained and engaged customers on social media, it also was one of the only luxury retail brands to really capitalize on it. In addition to providing exclusive, interesting content that helped generate a positive brand identity, Burberry’s online presence in terms of followers and total social media reach far outpaced its high fashion peers. Comparing Burberry to other luxury brands (notably the also omnichannel and tech-savvy Gucci), the social media numbers are shown in Exhibit 13.

Exhibit 13

Luxury Brand Social Media Presence

Source: Case Author

With the exception of Louis Vuitton, Burberry beat every other luxury brand in terms of social media impact, almost always by a substantial amount and in at least two platforms.

Technology

From streaming runway experiences to interactive digital displays at stores, one of Burberry’s key communication strategies was the use of technology. Inherent in almost every store, and receiving critical and design acclaim for interweaving it into the brick and mortar experience, Burberry incorporated this technology into creating the ultimate experience for the consumer.

In late 2012, Burberry began using Radio Frequency Identification (RFID) technology in flagship stores. This allowed them to identify individual product items using radio signals, which both gave key inventory information and triggered multimedia content for the shoppers.

Burberry also incorporated the use of “beacons,” a Bluetooth-based technology that interacts with mobile devices. If a customer downloaded the smartphone app, the beacon sensors communicated with them, pushing items like online promotions, product reminders, and suggestions.

Focused on providing a seamless merging of all Burberry worlds—online, in-store, and on the catwalk—Burberry also used a wide variety of cameras, screens, and speakers to broadcast its fashion shows live in flagship stores, allowing customers to order pieces that had just debuted immediately (Digital Exhibits). Technology also played a role in associate-customer interaction—all sales associates are equipped with an iPad—and in customer experience, everything from live band performances to “rain” falling in the store to RFID-triggered features that included videos about how the product was made, styling suggestions or even personalized information.

Conclusion: What Now?

Bailey reached for the lights, but, before turning them out, took a last look before heading out for the night. Animated and glittering displays, racks upon racks of beautiful garments giving way to stunning centerpieces and sweeping staircases, he pondered what the next step for all of this—the Burberry empire—was going to be. An ever-growing, increasingly global market meant new opportunities, but also new challenges in both distribution and brand currency. The digital innovations that had launched the company to the top were now nearly par for the course, with other luxury brands closing in quickly. How should Burberry position itself to both continue growth and stay relevant, but also stay true to its roots? Was the solution in more stores, specifically, more flagship stores? Should he maintain the current digital initiatives, or was Burberry going to really need to innovate to stay ahead? What was going to be the next revolution in retail technology? Globally, how did they continue to maintain growth? Was it going to be enough to do more of the same, or would that condemn them to falling back and becoming one of the pack?

And, how could he, a master of aesthetics, design and innovation, bring that foresight and creative touch to the running of all aspects of a company?

Exhibit 15

Income Statement Year to 31 March

Source: Bloomberg

Exhibit 16

Burberry’s Global Revenue from 2005 to 2014

Source: Statistia

Exhibit 17

Emma Watson Ad

Source: Burberry Website

Exhibit 18

Trenchcoat kid

Source: Burberry 2013 Annual Report

Digital Exhibits

Deloitte report on Luxury Markets: http://www2.deloitte.com/content/dam/Deloitte/ch/Documents/consumer-business/ch-cb-en-global-powers-of-luxury-goods-2014.pdf

Emma Watson Burberry Campaign: https://www.youtube.com/watch?v=wvZD2RHaqdA

“From London with Love” starring Romeo Beckham: https://www.youtube.com/watch?v=ojBufhpPgMo

Bailey gives tour of London Flagship store: https://www.youtube.com/watch?v=CokbQWI_15U

Burberry Introduces Smart Personalisation - The Burberry Prorsum Womenswear A/W13 Collection : https://www.youtube.com/watch?v=gUD_ZPwiAvk&feature=youtu.be

Authentic Branding for a Global Audience: Angela Ahrendts (Future of StoryTelling 2013): https://www.youtube.com/watch?v=krQG2Hceov4

Notes

  1. This case was prepared by Ashley Meigs, MBA 2015, under the supervision of Lawrence J. Ring, Chancellor Professor of Business and EMBA Alumni Chair in Executive Education, and Professor Ronald L. Hess, as a basis for class discussion. It is not intended to illustrate either effective or ineffective management. Copyright, 2015, by the Mason School of Business Foundation Board.
  2. Gabardine is a tough, tightly woven fabric used to make suits, overcoats, trousers, uniforms and other garments.
  3. Ahrendts, Angela. 2013. Burberry’s CEO in turning an aging British icon into a global luxury brand. January. https://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand/ar/1.
  4. (Ahrendts 2013)
  5. (Ahrendts 2013)
  6. (Ahrendts 2013)
  7. (Ahrendts 2013)
  8. (Ahrendts 2013)
  9. (Ahrendts 2013)
  10. (Ahrendts 2013)
  11. (Ahrendts 2013)
  12. Dishman, Lydia. 2012. In the Trenches with Burberry’s Christopher Bailey. August 31. http://www.fastcompany.com/3000941/trenches-burberrys-christopher-bailey.
  13. Collins, Lauren. 2009. Check Mate. 09 14. http://www.newyorker.com/magazine/2009/09/14/check-mate.
  14. (Collins 2009)
  15. (Ahrendts 2013)
  16. Alexander, Ella. 2012. Burberry Opens Regent Street Flagship. September 13. Ella Alexander.
  17. Cartner-Morley, Jess. 2012. Burberry designs flagship London shop to resemble its website. September 12. http://www.theguardian.com/fashion/2012/sep/12/burberry-london-shop-website.
  18. (Cartner-Morley 2012)
  19. (Cartner-Morley 2012)

Other References

Alexander, Ella. 2012. Burberry Opens Regent Street Flagship. September 13. Ella Alexander.

n.d. BBC Business. http://news.bbc.co.uk/2/hi/business/4381140.stm.

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n.d. Burberry LTD History. http://www.fundinguniverse.com/company-histories/burberry-ltd-history/.

Cartner-Morley, Jess. 2012. Burberry designs flagship London shop to resemble its website. September 12. http://www.theguardian.com/fashion/2012/sep/12/burberry-london-shop-website.

n.d. Christopher Bailey. http://www.businessoffashion.com/christopher-bailey.

Collins, Lauren. 2009. Check Mate. 09 14. http://www.newyorker.com/magazine/2009/09/14/check-mate.

Dishman, Lydia. 2012. In the Trenches with Burberry’s Christopher Bailey. August 31. http://www.fastcompany.com/3000941/trenches-burberrys-christopher-bailey.

2013. Forbes. 02 26. http://www.forbes.com/sites/johnkotter/2013/02/26/burberrys-secrets-to-successful-brand-reinvention/.

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McKenzie, Sheena. 2013. The Burberry CEO who reinvented a heritage brand for the digital age. 10 15. http://edition.cnn.com/2013/10/15/business/the-burberry-ceo-who-reinvented/.

Morrison, Maureen. 2012. A focus on digital makes Burberry relevant to a new generation. 12 10. http://adage.com/article/cmo-strategy/a-focus-digital-makes-burberry-relevant-a-generation/238671/.

n.d. Newsmakers: Rose Marie Bravo. http://www.notablebiographies.com/newsmakers2/2005-A-Fi/Bravo-Rose-Marie.html.

n.d. The Burberry transition just happened did you notice. http://blogs.ft.com/material-world/2014/05/01/the-burberry-transition-just-happened-did-you-notice/?Authorised=false.

n.d. The Great Universal Stores. http://www.burberryplc.com/about_burberry/company_history.

n.d. Timeline: Christopher Bailey. http://www.vogue.co.uk/person/christopher-bailey.

Wilkinson, Isabel. n.d. Christopher Bailey’s 10 years at Burberry’s livestreams Burberry body more. http://www.thedailybeast.com/articles/2011/10/31/christopher-bailey-s-10-years-at-burberry-livestreams-burberry-body-more.html.